The Federal Excise Tax on New Heavy-Duty Trucks Hurts Small Businesses
Congress imposes a 12 percent federal excise tax (FET) on most new heavy-duty trucks. As a way to raise revenue for the depleted Highway Trust Fund, proposals have been made to increase the FET. An increase in the FET would depress new heavy-duty truck sales and delay the deployment of cleaner, safer, and more fuel economical trucks. With the highway bill due to be reauthorized this year, Congress should opposes an FET increase, and instead consider lowering or eliminating the tax to address its detrimental impact on the environment and the trucking industry.
Tax Reform Impacting "Pass-Through" Entities Threatens to Harm Thousands of Dealerships
Any effort to reform only the corporate tax code could have a detrimental effect on small businesses, such as automobile dealerships, which often operate as “pass-through” entities. These businesses, which pay taxes at the individual income tax rates, could lose the benefit of critical tax preferences (i.e., deductions, credits and exclusions) while gaining none of the benefits of a lower corporate tax rate.
Estate Tax Reform Must Ensure Dealerships Remain Transferable To Future Generations
In January 2013, Congress passed an estate tax regime of a 40 percent rate and a $5 million exemption, indexed for inflation. This legislation also preserved crucial planning techniques such as stepped-up basis and spousal transfer of unused exemption amounts. Now that the estate tax is finally permanent, Congress must avoid making harmful changes that would impair the ability of dealerships to be transferred to the next generation or put dealership jobs at risk.
Eliminating LIFO (Last In, First Out) & Limiting Advertising Deductibility Takes Working Capital from Dealerships
LIFO (last in, first out) is a longstanding inventory accounting method used by businesses to help mitigate rising inventory costs. As costs rise, LIFO is a more accurate way of measuring financial performance and calculating tax. Similarly, advertising has been considered an ordinary and necessary business expense for more than 100 years. Recently released tax reform proposals would repeal LIFO, and significantly restrict the amount of advertising costs a dealership could deduct each year. Eliminating LIFO and limiting advertising deductibility would take working capital away from dealerships that could otherwise be used to maintain or create jobs.
Highway Trust Fund
Read ATD's testimony regarding the Highway Trust Fund: U.S. House Testimony | U.S. Senate Testimony